It certainly has been a year on Wall Street. As we close the books on 2017, it’s worth reflecting on the wild climb of the market this year and what this means for protecting our investments in 2018.
Recall that while stock market analysts were bullish going into 2017, their predictions were still wrong. According to James MacKintosh, journalist at the Wall Street Journal, analysts predicted climbing inflation would lead to “reflation” growth and increased returns on treasury bonds. They were wrong on both counts. The market grew in other ways.
“There are two big lessons to learn from the mistakes of the year-end crystal-ball gazing. The first is that when everyone agrees that prices can only go in one direction, it is dangerous. The second is more nuanced: We really know an awful lot less about how the economy works than we thought,” says MacKintosh.
Protect your investments: Fraud occurs in bull markets
When the market is rising and it seems like just about everyone is making money, we tend to overlook the possibility that our investments are at risk.
Look at where your investments are at the end of 2017. The Dow Jones is up 23% year to date and the S&P 500 is up 19%. If you invested in an all stock (equity) portfolio, you should be seeing returns similar to this. If your equity investments only returned, for example, 11% this year, you may want to take a closer look at your portfolio. These lower returns may signify negligence or other misconduct on the part of your broker.
Never hesitate to contact your financial advisor. A good advisor will be able to explain your portfolio and answer any questions with supporting documentation.
Double check account allocations
Returns that are higher than the overall market may signify that your investments are actually more risky than you wanted. While above anticipated growth in a single year may have you wanting to dance a jig, the overall risks of such investments may not justify the short-term rewards.
Think about it this way: If the market was cut in half tomorrow, would you still have time to rebuild your funds?
Your account allocations need to be suitable for your age and your retirement goals. Ask questions of your advisor about the suitability of your portfolio for your financial goals.
Be wary of big opportunities
Cryptocurrency. Real Estate. Bonds. A new fund hitting the market. There is an abundance of seemingly promising investment opportunities when the market is doing well.
Do research on your own before making any investments. This task may seem like a “no brainer,” but you would be surprised by the risks people will take when they are feeling good and making money on the market.
Check the source. Who is offering you the investment? You can look up a broker’s background by using FINRA’s BrokerCheck tool.
Avoid offshore investment opportunities. Fraudulent schemes often involve offshore accounts because they are difficult trace and investors are less able to seek legal recourse to recover their money.
Above all: Don’t race through 2018
To avoid getting caught up in the hubbub of the bull market, take your time. Do your homework. Remember to approach all investment opportunities cautiously.
If you’ve looked over your 2017 portfolio and feel there are discrepancies in your returns or account allocations, know that an investment fraud attorney can help. Determining whether you were the victim of investment fraud or negligence takes time and a careful review of documents. Contact the law office of Fishman Haygood Investment Fraud Lawyers for help today.
Wishing everyone a happy and prosperous New Year.